RAJ KUMAR DUA v. CALTEX LUBRICANTS INDIA LTD. , CHENNAI
2004-10-28
N.K.MODY
body2004
DigiLaw.ai
ORDER N.K. Mody, J. Being aggrieved by the inaction on the part of the respondents in not appointing the Arbitrator, the petitioner has filed this petition u/s 11(6) of the Arbitration and Conciliation Act, 1996, which for the convenience, shall hereinafter be referred as the "Act". Short facts of the case are that on 30th June, 2004, the petitioner moved the aforesaid application for constituting an Arbitral Tribunal, alleging that an agreement took place between the petitioner and M/s Chemoleurns Ltd., on 28th. March, 2001. The aforesaid Company was engaged in manufacturing lubricants and was having registered office at 37, First Main Road, CIT Nagar, Chennai. It was alleged that by the agreement the petitioner was appointed as agent for operation of sales depot at Indore. It was alleged that during the course of operation of business, M/s Chemoleurns Ltd., was amalgamated with the respondent and the amalgamation was approved by the High Court of Calcutta vide order dated 17-3-2003 in Company Petition No. 602/2002. The petitioner alleged in his petition that on 30th June, 2003, the General Manager (Supply) of the respondent Company conveyed to the petitioner that validity of the agreement is extended up to 31st March, 2003. Vide notice dated 31st December, 2003, the respondent informed the petitioner that the operations are not viable for either of the parties, therefore, the respondent has decided to close down its operation through the petitioner depot. It was alleged that vide notice dated 15th April, 2004, the petitioner raised a dispute and claimed Rs. 1,34,00,000/- under different heads and requested the respondent to constitute Arbitral Tribunal. It was alleged that the respondent sent the reply on 26-4-2004 wherein the respondent remained silent about the constitution of Arbitral Tribunal. It was alleged in the petition that since the respondent has failed in constituting the Arbitral Tribunal, therefore, it was prayed to constitute the Arbitral Tribunal. The respondent-Co. replied on 11th October, 2004, wherein, the jurisdiction of this Court was disputed on the ground that as per Clause 33 of the agreement, in case of dispute, the sole jurisdiction is with the Court of Chennai. Respondent further alleged that the petition has become infructuous as the respondent has already appointed Shri V. Kenga Subbiah, Retired District and Sessions Judge, Chennai, as the Sole Arbitrator, in accordance with Clause 32 of the agreement.
Respondent further alleged that the petition has become infructuous as the respondent has already appointed Shri V. Kenga Subbiah, Retired District and Sessions Judge, Chennai, as the Sole Arbitrator, in accordance with Clause 32 of the agreement. It was further alleged that the said Arbitrator has already sent a registered letter dated 30th September, 2004, to both the parties to appear before him on 21st October, 2004 at 3.00 P.M. at 15, Gengu Reddy Street, Egmore, Chennai. Facing with the aforesaid reply, learned counsel for the petitioner Shri V. R. Rao, submits that the notice for constitution of Arbitral Tribunal was issued on 15th April, 2004, but the respondent failed to constitute the Tribunal within 30 days from receipt of the request by the petitioner hence the respondent has ceased its right to constitute the Arbitral Tribunal in view of section 11(5) of the Act. For this contention, learned counsel for the petitioner placed reliance on Datar Switchgears Ltd. Vs. Tata Finance Ltd. and Another, , Datar Switchgears Ltd. vs. Tata Finance Ltd., and anr., wherein, it is held by the Hon'ble Supreme Court that once the other party moves the Court, the right to make the appointment ceases to exist. Learned counsel further relies on Konkan Railway Corporation Ltd. and Another Vs. Rani Construction Pvt. Ltd., , wherein, the Hon'ble Apex Court has held that section 11 of the Act, does not contemplate a decision by the Chief Justice or his designate on any controversy that the other party may raise, even in regard to its failure to appoint an arbitrator within the period of thirty days. It is further held in the aforesaid judgment that the Chief justice or his designate has to make the nomination of an arbitrator only if the period of thirty days is over does not lead to the conclusion that the decision to nominate is adjudicatory. The Hon'ble Supreme Court has observed in para 19 of its judgment that the only function of the Chief justice or his designate u/s 11 is to fill the gap left by a party to the arbitration agreement or by the two arbitrators appointed by the parties and nominate an arbitrator. This is to enable the Arbitral Tribunal to be expeditiously constituted and the arbitration proceedings to commence.
This is to enable the Arbitral Tribunal to be expeditiously constituted and the arbitration proceedings to commence. The function has been left to the Chief justice or his designate advisedly, with a view to ensure that the nomination of the arbitrator is made by a person occupying high judicial office or his designate who would take due care to see that a competent, independent and impartial arbitrator is nominated. Relying on the aforesaid decision, the learned counsel for the petitioner submits that the petition has not become infructuous. On the contrary, the respondent has ceased the right to make the appointment of an arbitrator. Shri J. P. Sanghi, learned Senior Advocate, submits that this Court is not having the territorial jurisdiction to entertain the application. For this, the learned counsel has placed reliance on Hanil Era Textiles Ltd. Vs. Puromatic Filters (P) Ltd., , wherein it is held that where two or more Courts have jurisdiction under CPC and agreement restricts place of suing to any one of them, then such an agreement is not contrary to public policy and does not contravene section 28 Contract Act, 1872. I have heard the arguments of both the parties and perused the record. In my opinion this petition deserves to be dismissed because the mandatory requirement of the law is that the party who is desirous to get the arbitral tribunal constituted through the agency of the Court is required to issue notice to the other party clearly asking for appointment of arbitrator and after issuing the notice, if the other party fails for a period of 30 days from receipt of the request, then only the right to appoint the arbitrator ceases. In this case, the alleged notice is dt. 15th April, 2004, wherein, no demand for appointment of arbitrator is made by the petitioner, on the contrary, it is alleged in the notice that if the respondent fails to comply with the demand made by the petitioner, within 7 days from the receipt of the notice, then the petitioner shall be compelled to apply for appointment of the Arbitrator for adjudication and payment of his claims through the Arbitrator. It is further mentioned in the said notice that the petitioner reserves his right to submit his detailed claim before the Arbitrator as and when the occasion for appointment of the Arbitrator arises.
It is further mentioned in the said notice that the petitioner reserves his right to submit his detailed claim before the Arbitrator as and when the occasion for appointment of the Arbitrator arises. From perusal of the aforesaid notice, it is evident that the notice is for demand of the claims of the petitioner and in case of failure, the petitioner has kept his right reserved for demanding of appointment of Arbitrator. By no stretch of imagination it can be said that the notice dated 15-4-2004 is the notice for demand for constitution of Arbitral Tribunal. Since the respondent has already appointed the Arbitrator even without the demand being made by the petitioner and the Arbitrator which is appointed is a Retired District and Sessions Judge of Chennai, as the Sole Arbitrator, therefore, it can be presumed that a competent, independent and impartial Arbitrator is nominated. Since the function of this Court u/s 11 of the Act is purely administrative and being nominee or designate of the Chief Justice, this Court has no jurisdiction to adjudicate upon the disputed question of facts and law, therefore, it is not necessary to express any opinion on the question of jurisdiction. In view of this, the petition is dismissed with no order as to costs.